U.S. Pat. No. 6,077,851 discloses a variety of quinoline-3-carboxamide derivatives and their salts, processes for their preparation, pharmaceutical compositions comprising the derivatives, and method of use thereof These compounds are useful for clinical treatment of diseases resulting from autoimmunity such as multiple sclerosis, insulin-dependent diabetes mellitus, systemic lupus erythematosus, rheumatoid arthritis, inflammatory bowel disease and psoriasis and, furthermore, diseases where pathologic inflammation plays a major role, such as asthma, atherosclerosis, stroke and Alzheimer's disease. Of these compounds, N-ethyl-N-phenyl-1,2-dihydro-4-hydroxy-5-chloro-1-methyl-2-oxoquinoline-3-carboxamide is important, since it is well-known as a pharmaceutically active substance under the name of Laquinimod. Laquinimod is a promising immunomodulatory agent and useful for the treatment of multiple sclerosis and its manifestations. Laquinimod is represented by the following structural formula I(i):

Processes for the preparation of laquinimod and its sodium salt are disclosed in U.S. Pat. Nos. 6,077,851 and 6,875,869.
U.S. Patent No. 6,077,851 (hereinafter referred to as the '851 patent) describes several synthetic routes for preparing laquinimod. According to first synthetic process, laquinimod is prepared by the reaction of 1,2-dihydro-4-hydroxy-5-chloro-1-methyl-2-oxo-quinoline-3-carboxylic acid ethyl ester with N-ethylaniline in a suitable solvent such as toluene, xylene and the like, to produce a reaction mass containing laquinimod, followed by distillation of ethanol formed during the reaction and then subjected to usual work up to produce laquinimod, which is then converted into its sodium salt.
According to a second synthetic process as described in the '851 patent, laquinimod is prepared by the reaction of 5-chloro isatoic anhydride with N-ethyl-N-phenylcarbamoyl acetic acid ethyl ester in the presence of methyl iodide and a strong base such as sodium hydride in a suitable solvent such as N,N-dimethylacetamide.
According to a third synthetic process as described in the '851 patent, laquinimod is prepared by the reaction of 1,2-dihydro-4-hydroxy-5-chloro-1 -methyl-2-oxo-quinoline-3-carboxylic acid with N-ethylaniline using coupling reagents such as carbodiimides and thionyl chloride in the presence of triethylamine to produce laquinimod.
Laquinimod obtained by the processes described in the '851 patent does not have satisfactory purity. Unacceptable amounts of impurities are generally formed along with laquinimod, thus resulting in low yields of the product. Moreover, the processes involve the use of additional, explosive and hazardous reagents like sodium hydride, methyl iodide and thionyl chloride. The use of thionyl chloride and sodium hydride is not advisable for scale up operations.
U.S. Pat. No. 6,875,869 (hereinafter referred to as the '869 patent) describes an improved process for the preparation of laquinimod comprising reacting 1,2-dihydro-4-hydroxy-5-chloro-l-methyl-2-oxo-quinoline-3-carboxylic acid methyl ester with N-ethylaniline in the presence of a solvent selected from straight or branched alkanes and cycloalkanes or mixtures thereof with a boiling point between 80° C. and 200° C., specifically n-heptane, n-octane or mixtures thereof. This process has the disadvantage that the preparation of laquinimod takes place essentially at higher temperatures using high boiling point solvents, and these solvents furthermore also have to be used in high volumes, for example, about 20 volumes, with respect to the methyl ester intermediate.
Based on the aforementioned drawbacks, the prior art processes may be unsuitable for preparation of laquinimod in commercial scale operations.
A need remains for an improved and commercially viable process of preparing a substantially pure laquinimod, derivatives thereof, or a pharmaceutically acceptable salt thereof to resolve the problems associated with the processes described in the prior art, and that will be suitable for large-scale preparation. Desirable process properties include less hazardous and environmentally friendly reagents, lesser reaction time, reduced cost, and greater simplicity, increased purity and increased yield of the product.